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GameStop Confirms It’s Open To Offers

The No. 1 videogame specialty chain has confirmed that it’s “in exploratory discussions with third parties regarding a potential transaction.”

The company issued the terse statement today after Reuters reported that private-equity firms are sniffing around the Grapevine, Texas-based business. Potential investors include Sycamore Partners, which acquired Staples one year ago for $7 billion.

GameStop has hired a financial advisor to assist in the buyout talks, the wire service said.

The discussions come during a tumultuous time for the retailer, which recently lost its longtime CEO Paul Raines to cancer. His successor, Michael Mauler, left last month for personal reasons after less than three months on the job, but not before losing the company’s COO and a strategic business executive VP. The chain is currently run by board member and interim CEO Shane Kim.

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More pressing is the impact of direct videogame downloads by software developers, manufacturers and rival merchants on the company’s core business, and the peak-and-valley nature of console launch cycles. Raines tried to lessen the retailer’s reliance on gaming by diversifying into Apple products, mobile phones and collectibles through its Simply Mac, Spring Mobile, Cricket and ThinkGeek chains.

Sales for the flagship GameStop business stabilized last year, edging up 3 percent to $3.5 billion and keeping it in seventh place on the TWICE Top 100 Retailers rankings.

But for the first quarter of 2018, ended May 5, companywide sales slipped 5.5 percent, to $1.9 billion, comps declined 5.3 percent, and net income fell 39 percent, to $28.2 million, on weakness in gaming software and hardware, and mobile.

GameStop said it doesn’t plan to discuss the acquisition discussions “unless and until it is appropriate to do so.”